SPRINGFIELD, Mass. (2/19/08)--A U.S. District Court in Massachusetts began hearing testimony last week in the embezzlement trial of community development credit union advocate Carol Aranjo and her husband, Alphonso Smith. They are charged with conspiracy, embezzlement and tax charges related to shortfalls and missing loan files discovered at the now defunct D. Edwards Wells CU, which was based in Springfield, Mass. Aranjo was CEO of the credit union before it was shut down by regulators in 2003. At issue in the trial is a confusing morass of loans and grants coming in and out of the credit union and its partner organizations, Friends of the Credit Union and the FOCUS loan fund (The Republican Feb. 14. On Thursday, the jury heard testimony from former board members indicating that Aranjo had a $150,000 negative balance in her own accounts and a $30,000 shortfall in her husband's account in 2000, the same year the credit union suffered a $225,000 operating loss. A $2 million insurance settlement with inner city communities provided a windfall, which prosecutors say Aranjo manipulated to cover overspending at the agency. Losses totaled about $1.3 million, they said (The Republican Feb. 15). In questioning Thursday, former supervisory committee member William H. Zachery Jr., an auditor with the Internal Revenue Service, testified he made a list of missing files during an audit in 2000. Among those missing were Aranjo's mortgage and loans under her two sons' names. Other insider loans were incomplete and lacked loan applications and other key paperwork, he said. Between 2000 and 2003, Aranjo and federal regulators fought over the audit findings. Aranjo prohibited the National Credit Union Administration's examiners from access to the credit union's records and unsuccessfully tried to bar them with a restraining order in 2002, according to prosecutors. The trial is expected to continue until early March before Judge Michael A. Ponsor. If convicted, Aranjo faces up to 14 years in prison.